TaxTMI 
TaxTMI 
2023 (2) TMI 873
X X X X Extracts X X X X
X X X X Extracts X X X X
.... outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant submits that as a job worker he expects to receive an order for manufacture of gold ornaments from a registered person in the state of West Bengal (the principal). The business model, as ilustrated by the applicant, is as follows: (i) The applicant will be provided 1000 grams of pure gold by the principal for manufacturing of gold ornament; (ii) The applicant will be allowed a provision for wastage of 40 gms by the principal i.e., the applicant has to return gold ornaments weighing 960 gms to the principal; (iii) The applicant, thereafter, would....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wing such wastage by the principal is in the nature of normal loss that occurs during the course of manufacturing and it is an industry-wide practice to allow such provision for wastage or normal loss. 2.3 According to the applicant, the consideration for providing the manufacturing services is the making charge of the gold ornaments, whereas the provision for wastage of 40 grams of pure gold is to meet the normal loss that would occur during the course of manufacture. Further, these terms of consideration and provision for wastage would be expressly accepted by the applicant and the principal in the work order. It is thus imperative to distinguish the provision for wastage from consideration for supply of services. 2.4 The applicant, upon receipt of the pure gold from his principal, sub-contracts this job to another job worker wherein on the basis of the applicant's experience, internal efficiency and bargaining power, the provision for wastage allowed to the job worker is 30 grams of pure gold. The applicant, thus, is ultimately left with 10 grams of pure gold which, according to the applicant, is not a consideration for supply of services but self-generated based on applicant'....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... person. In the instant case, the applicant undertakes the work of manufacturing of gold ornaments on pure gold that belongs to another registered person. Hence, the activities being carried out by the applicant comes under the purview of job work as defined in the GST Act. 4.4 Now we take the issue of allowing of wastage to the applicant for the purpose of manufacturing of gold ornaments. The applicant contends that the provision for allowing such wastage is in the nature of normal loss and it is an industry-wide practice to allow such provision for wastage or normal loss. We find that Government of India, Ministry of Commerce and Industry, Department of Commerce, Director General of Foreign Trade, in the HANDBOOK OF PROCEDURES [1st April, 2015 - 31st March, 2020] has prescribed the Wastage Norms for the Gems and Jewellery Sector. It would be pertinent to mention that in course of personal hearing, the authorised representative of the applicant has been asked to provide a certificate from the competent authority in respect of quantum/percentage of wastage allowed in manufacturing of gold ornaments. The authorised representative, in response, has also referred the aforesaid Handbo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll not include any subsidy given by the Central Government or a State Government; [emphasis supplied] 4.7 Further, sub-section (1) of section 15 of the GST Act speaks that "the value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply". 4.8 In the instant case, the applicant agrees to provide job work services for manufacturing of gold ornaments to his principal against consideration which is in money. At the same time, the applicant has been allowed wastage by his principal on account of manufacturing loss which exceeds the wastage norm limit that enables the applicant to retain certain amount of pure gold. The process of making gold jewellery involves melting, cutting, moulding, polishing etc. which may result in some amount waste of gold. However, retaining a certain amount from the input (10 gm of pure gold for the instant case) before it put into the manufacturing process cannot be treated as 'wastage' or 'normal loss'. We are, therefore, of t....